Fund of the week: Filling the shoes of a star manager

Star fund manager Neil Woodford’s departure from Invesco Perpetual has hit his funds hard. His Income and High Income funds saw outflows of £1.4bn in the month to 11 December alone.

This “mega-sized” £1.1bn investment trust has also suffered over the uncertainty of who will fill Woodford’s shoes, says Kate Morley in the Investors Chronicle.

The good news is that the trust – which has, unusually for an investment trust, tended to trade at a premium to net asset value (ie, for more than its underlying portfolio is worth) – is now trading at a small discount.

Moreover, the incoming manager of the Edinburgh Investment Trust (LSE: EDIN) has a track record to match Woodford’s.

With his Perpetual Income and Growth Investment Trust, Mark Barnett delivered a 130.7% return in the five years to 31 December 2013 – not far off Woodford’s 135.8% return over the same period with Edinburgh.

Edinburgh Investment Trust price chartInvesco Perpetual’s chairman, Jim Pettigrew, has told investors that Barnett, who worked with Woodford for 17 years, “shares the same active, value-driven investment approach and long-term focus”.

The trust invests mainly in UK shares, which account for 83% of its holdings. It aims to beat the performance of the FTSE All-Share index. Just over a third of the portfolio is in healthcare, 22.8% in consumer goods and 19.6% in industrials. Barnett hasn’t revealed his strategy in detail, but he believes that equities may well generate lower returns in 2014 than in past years.

Adrian Lowcock of Hargreaves Lansdown thinks he will trim the number of holdings in the trust, and hold fewer large stock positions than Woodford. With an ongoing charge of 0.71%, the trust should suit investors looking to boost their exposure to UK stocks.

Edinburgh Investment Trust top ten holdings
Name of holding % of assets
AstraZeneca 9.3%
GlaxoSmithKline 8.8%
BT Group 7.8%
British American Tobacco 6.2%
Roche Holdings 5.8%
Imperial Tobacco 5.2%
BAE Systems 5.2%
Reckitt Benckiser 4.6%
Capita 4.3%
Reynolds American 4.3%

 

Merryn

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